Russians lead demand for prime property in London with number increasing by 112% in the last 2 month
Demand from Russian buyers is pushing up the price of prime property in central London, according to a new report.
Prices increased by 1.4% in May, the 14th consecutive monthly rise and are now 23% higher than they were at their lowest point in March last year, the latest Central London Residential Index from Knight Frank shows. But prices are still 6.4% below the market peak of March 2008 market peak
The report shows that price growth in Chelsea, Kensington, Notting Hill and Knightsbridge has led the market over the past 12 months, but now Mayfair, Kensington and Knightsbridge are rising strongly with price growth of 14% across these locations over the last six months.
The research also shows that it is overseas buyers who are leading the market with the number of buyers from Russia having jumped by 112% in the last two months.
‘The London residential market is continuing to lead the wider UK market. The weak pound is having the effect of pulling in demand from overseas buyers, who view London as offering good value, with prices still 34% lower in dollar terms from the 2008 peak,’ said Liam Bailey, head of residential research at Knight Frank.
‘Russian buyers have become very noticeable over the past two months and have bucked the trend set by domestic buyers who became less committed in the run up to the election. Russians and most other nationalities buying in London are fairly unaffected by political upheaval and have remained by far the most confident and proactive buyers in the market,’ he explained.
He said there is no doubt that the current global financial market upheaval has unsettled buyers and sellers and proposed changes to capital gains tax have also unsettled some sellers in particular, and there has been a sharp uplift in prospective vendors looking to test the market. ‘Our data reveals a growth of 64% in requests for pre-sale advice and valuations, however this is not yet turning into hard instructions to sell,’ Bailey revealed.
But there is growing evidence in the wider UK market that residential sales volumes and even prices are coming under pressure. ‘London will not escape this entirely over the next few months however, the impact of strong and resilient demand from overseas will support the market,’ added Bailey.
Recent uncertainty in the Euro Zone has strengthened the Rouble and encouraged buyers, according to Elena Norton, Head of Knight Frank’s Russia & CIS Desk. ‘Buyers from Russia and the CIS states have increased their interest in London’s luxury market on the back of recent events in the Euro zone which has prompted the strengthening of the Rouble against the pound. The ongoing recovery in prime London prices has also created additional interest in London as buyers now believe that the market is likely to continue to strengthen,’ she explained.
‘I can see a clear shift in demand towards single house refurbishments and even larger development opportunities where Russians can be investors or co-developers. Increasingly they are looking to add value over the longer term, which proves that Russian buyers consider London property a safe and attractive investment,’ she added.